HD 28
.M414
OCT 201987
ALFRED
P.
WORKING PAPER
SLOAN SCHOOL OF MANAGEMENT
INDUSTRIAL RELATIONS AGENDA FOR CHANGE:
THE CASE OF THE UNITED STATES
Thomas A. Kochan
and
Kirsten R. Wever
Sloan School of Management, Industrial Relations Section
MIT
May, 1987
WP# 1888-87
MASSACHUSETTS
INSTITUTE OF TECHNOLOGY
50 MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02139
INDUSTRIAL RELATIONS AGENDA FOR CHANGE:
THE CASE OF THE UNITED STATES
Thomas A. Kochan
and
Kirsten R. Wever
Sloan School of Management, Industrial Relations Section
MIT
May, 1987
WP# 1888-87
This paper was prepared for the Organization for Economic
Cooperation and Development.
The contents are solely
the responsibility of the authors.
M.I.T.
OCT
LIBRARIES
2
1987
RECEIVED
INDUSTRIAL RELATIONS AGENDA FOR CHANGE:
THE CASE OF THE UNITED STATES
by
Thomas
A.
Kochan
and
Kirsten
R.
Wever
INTRODUCTION
Over the past several decades all of the advanced industrial
societies have experienced growing pressures on the institutions
governing their industrial relations systems.
These pressures
can be traced to long-term changes in the nature of the
international economy, and have manifested themselves in
different ways from one country to another.
The cases of the
OECD member countries are strikingly similar, however, insofar as
general macro-economic problems (in the US,
sluggish productivity
growth and large trade deficits) have generated the pressing need
for thorough-going changes in the ways in which the government,
organized labor and businesses deal with one another.
It has become increasingly obvious that widespread economic
problems require solutions that depend critically on the active
participation and cooperation of all three parties to the
The tasks of revitalizing our
employment relationship.
industrial base and international competitiveness, while
simultaneously avoiding
a
decline in the general standard of
living, demand new forms of industrial relations.
Although the
shape of this imminent transition has not yet become clear,
-1-
a
variety of experiments and changes have taken place in
industrial relations in the United States- during the first half
of the 1980s which the parties can now begin to evaluate and
learn from.
The nature of the system that ultimately emerges out
of this transition process will be determined in large measure by
the environmental conditions within which labor, business and
government actors operate, and by the strategies those actors
adopt as they continue to pursue the variety of organizational
and industrial relations adjustment processes initiated in recent
years
The main purpose of this paper is to lay out the historical
and environmental contexts in which the current changes are
taking place in the United States.
We will describe and document
contemporary trends in employment and industrial relations,
suggest some areas in which we believe problems are likely to
emerge or intensify over the coming decade,
and point to some
avenues and opportunities for constructive change. Underlying our
discussion is the central premise that sustaining and diffusing
changes in industrial relations will be necessary to achieving
solution to the broader macro-economic pressures of the day.
HISTORICAL AND STRUCTURAL BACKGROUND:
THE NEW DEAL SYSTEM
To understand the nature and significance of contemporary
developments we first need to characterize the essential
-2-
a
functions of the industrial relations system, which were shaped
in the 1930s by the government policies of the New Deal.
The
primary feature of the New Deal industrial relations system was
that it relied on collective bargaining as the preferred means
for setting the terms and conditions of employment in the largest
companies in the US.
The principles and policies established in
collective bargaining were in many ways then replicated in
nonunion firms and sectors of the economy.
The collective
bargaining process itself was considered to be the best method of
accomodating
a "mixed"
adversarial/cooperative relationship
between workers and business enterprises.
One of the primary attractions of this method of regulating
industrial relations was that it was consistent with a
non-interventionist policy on the part of the federal government.
The National Labor Relations Act (NLRA), passed in 1935,
essentially established rules governing the processes of union
organizing and the negotiation of contracts, but did not specify
the substantive content of these contracts.
Management was
required to bargain in good faith, but what was agreed to was
left up to the private parties.
This approach was consistent
with the "pragmatic" and "business unionist" philosophy of
American labor, and did not challenge the fundamental principles
of free enterprise which the American business community
staunchly defended.
In return for their role in negotiating wages,
hours and
working conditions, unions accepted managerial control over
strategic decision making and the organization of shop floor
production process.
-3-
Labor pursued
a
sort of "job control unionism" which narrowly
delineated tasks and work jurisdictions within those managerially
defined processes.
An equally formalized grievance and
arbitration procedure ensured that disputes over the
interpretation of agreements were settled
necessary by a third party.
impartially, and when
Within the limits thus defined in
highly complex and formalized contracts, management maintained
its rights to make basic investment,
technology, production, and
related strategic decisions.
The institutional structure for industrial relations
operated within, and over time came to support, a Keynesian
macro-economic policy that encouraged economic growth through the
maintenance of high levels of purchasing power.
These policies
were accompanied by an expanding domestic market fueled first by
wartime production demands and later by
a
mixture of consumer and
government demand for manufacturing goods, as well as growing
economies of scale.
In combination,
these circumstances
provided steady productivity growth which could support rising
incomes and standards of living.
Collective bargaining became
adapted to this environment over time, establishing wage setting
principles and structures to "take wages out of competition" by
standardizing wages across US firms competing in the same product
and labor markets. More generally,
the collective bargaining
process adjusted wages upward in ways consistent with long run
increases in productivity and the cost of living.
Yet because
collective bargaining remained highly decentralized, there was
sufficient variation in bargaining outcomes that contracts could
-4-
be responsive to the specific economic circumstances of
individual industries and firms.
the complex, decentralized, collective
Thus,
bargaining-oriented job control unionism of the New Deal System
contained features that were attractive to leaders in government,
businesses and labor.
For the government the system established
rules to regulate labor-management relations without requiring
substantive (as opposed to formal or procedural) state
intervention.
For the business community it stabilized a
potentially volatile workforce and limited unions' influence in
management to the areas of wages, hours and working conditions.
For union leaders. New Deal industrial relations provided the
foundation for what would be
rapidly growing union base, and a
a
rapid growth in the level of wages for unionized workers.
The American Federation of Labor
and Congress of Industrial Organizations
The umbrella association for the vast majority of American
unions is the American Federation of Labor and Congress of
Industrial Organizations (AFL-CIO).
The AFL was founded in 1886
to represent the combined interests of the nation's craft
unions.
plants,
Craft unions represent skilled workers in
firms and industries,
definition,
a
variety of
and generally focus on the
status and defense of relatively narrow occupational
jurisdictions.
Industrial unions channel their efforts toward
representing all the workers -- regardless of skill or job
definition -- in
a
given plant,
firm or industry.
-5-
The Congress
of Industrial Organizations (CIO) was created in 1938,
to
coordinate the activities of several emergent industrial unions
that broke away from the AFL in 1935.
The AFL and the CIO merged
again in 1955 with the intention of forming
labor federation.
a
unified national
Both before and since the merger the primary
function of the federation has been to represent workers'
interests in political affairs through lobbying, political
endorsements, research, education, and communications and public
relations.
The memberships and the revenues of the ten largest
unions in the US in 1984 are shown in Figure
1.
While labor generally alligns with candidates from the
Democratic Party in national elections, exceptions to this
pattern are fairly common at the state and local levels.
At
these levels, candidates from the Republican party who are
responsive to unions' interests sometimes receive organized
labor's support.
Moreover, the largest union not presently
affiliated with the AFL-CIO (and, indeed, the largest in the
country), the International Brotherhood of Teamsters, has
generally supported Republican candidates in recent presidential
elections
The political influence of labor in the US should not be
entirely discounted simply because of the lack of
a
labor party,
or because of the very loose affiliation between labor and the
Democratic Party.
Labor's influence over broad areas of social
and economic policy has varied considerably over the years.
would agree that its influence at the national level has been
limited in the 1980s by the conservative philosophies and
-6-
Most
policies of the Reagan Administration and the ascendancy of
a
more conservative political climate in the country.
over
Still,
the years the labor movement has been one of the most influential
forces behind passage of and improvements in major bodies of
civil rights, occupational safety and health, minimum wage,
pension reform and social security legislation (Goldberg 1976).
However, compared to the more socially and politically active
labor movements of most other OECD countries,
the US labor
movement stands out as being:
(1)
less committed to any sort of socialist ideology
or political agenda;
(2)
less formally integrated into and alligned with
the agenda of a single political party; and
(3)
more interested in policies that foster
decentralized collective bargaining (rather than
comprehensive legislation governing the
workplace)
Later in this paper we argue, as other have done, that the
political role of the American labor movement will become
increasingly important in the years to come.
Unionization Levels
Between the mid 1930s and the 1950s private sector unionism
grew at a rapid rate.
In 1932 only 10% of the non-agricultural
workforce was unionized; in 1955 that figure had increased to an
all-time peak of 35%, and declined slightly toward the end of the
1950s.
But while private sector unionism slid into
a
steady
decline in the 1960s, from the mid 1960s onward there was
of public sector unionization,
a
burst
which grew from 12% to 40% of all
-7-
public sector workers between 1960 and 1980 (Burton 1979). Public
sector workers now account for more than
members in the US.
a
third of all union
Unionization on the whole has declined
steadily since the late 1950s, however, and currently is the
lowest among the OECD countries, at only about 17% of the labor
force in 1986.
Employer Associations
Paralleling labor's focus on collective bargaining and the
decentralized nature of industrial relations in the US, peak
employer associations have played limited roles in the US
context.
The three major peak employer associations are the
National Association of Manufacturers (NAM), the Chamber of
Commerce and the Business Roundtable (Windmueller and Gladstone
1984)
.
All of these have generally opposed legislation designed
to expand or strengthen worker rights and union power.
However,
from time to time these organizations have engaged in legislative
activity that has weakened the protections and rights extended to
unions under US labor law.
The most notable example is the 1947
Taft-Hartley Act, which imposed restrictions on unions' use of
secondary boycotts and closed shops, and gave states the right to
outlaw union shop clauses in collective bargaining agreements.
But beyond lobbying to counter union influence, these
associations have never been major forces in shaping employer
approaches to US industrial relations.
Rather,
the center of
power on the management side of industrial relations lies at the
level of the individual corporation.
-8-
It is true that patterns of
collective bargaining and the shapes of contracts were set by
certain industry models, perhaps most importantly that of the
automobile manufacturing sector.
But labor-management relations
remained determined primarily on a firm-by-firm
(or
plant-by-plant) basis.
The major exceptions to plant- or firm-centered industrial
relations were found in those industries where the structure of
bargaining was coordinated on an industry-wide or regional basis,
as in steel,
coal,
trucking and construction.
As bargaining in
these industries centralized, employer associations organized to
coordinate management strategy, and to represent member firms at
the bargaining table (Windmueller and Gladstone 1984)
years, however,
.
In recent
the power and influence of these industry
associations have declined considerably, paralleling the decline
(or,
as in steel,
the demise) of industry-wide bargaining
(Freedman and Fulmer 1983).
Labor Law
The two primary pieces of labor legislation of the New Deal
system are the Railway Labor Act (RLA) of 1926, which initially
applied only to railroads but was later extended to airlines and
trucking,
and the National Labor Relations Act (NLRA) of 1935,
which covers most industries in the economy.
The RLA entails
elaborate dispute resolution mechanisms administered for the most
part by the National Mediation Board (NMB).
Provisions for
extensive mandatory mediation and voluntary arbitration
procedures under the RLA were effected in the interest of
minimizing work stoppages in the transportation sector, which was
believed to be vital to the national interest.
The dispute
resolution procedures of the NLRA are less encompassing.
Over
the postwar period, the tendency of the NLRA's National Labor
Relations Board (NLRB) has been to defer dispute resolution to
arbitration procedures voluntarily agreed to by the parties to
the employment relationship.
To date, grievance arbitration
remains the most common form of dispute resolution for issues
pertaining to day-to-day interpretations of labor contracts.
But
since 1960, with the growth of legislation and regulations
governing worker rights, federal and state courts have come to
play an increasingly important part in adjudicating
worker-employer disputes over discrimination, safety and health
and a range of other workplace issues.
Formal arrangements for labor-management cooperation in the
US have historically been quite limited.
War Labor Boards were
established during both world wars to ensure price stability and
low levels of labor strife during wartime.
Labor Board there have been only
a
Since the second War
small number of
government-initiated labor-management forums.
short-lived,
Most of these were
such as President Kennedy's Labor-Management
Advisory Panel.
Most were also focused on specific issues like
the wage-price guidelines and controls of the Nixon,
Carter Administrations in the 1970s (Moye,
been
a
1980).
Ford and
There have
small number of private labor-management groups that have
met to discuss issues of national importance.
these have tended to avoid labor policy issues,
-10-
However, most of
since it has
seldom been possible to reach any consensus in this area.
Tripartite Consultation
In recent years, however,
in the face of increasing
international competitive pressures on the US economy, a number
of public and private groups of management,
labor and government
leaders have begun to meet in order to search for ways to improve
the performance of the US economy.
If history is any guide,
it
will be very difficult for these groups to come to agreement on
matters affecting labor and human resource policy, and even
harder to generate the political influence and discipline needed
to implement any recommendations reached.
However, the emergence
of such groups may have an important subtle and indirect
influence on the nature of the policy agenda.
For instance,
they may illuminate some areas of shared understanding about how
labor and employment policies should fit into broader national
economic policies, or establish informal communication networks
among labor and management leaders.
It is consistent with the decentralized nature of US
industrial relations that labor-management cooperation has been
most visible at the community level, and within individual
collective bargaining relationships.
At present,
there are
approximately forty community level labor-management committees
in the US.
Most of these are concerned with impoving the climate
of labor-management relations,
economic development resources.
in the hopes of attracting greater
The more active among them also
provide training and technical assistance to firm-level
-11-
cooperative efforts.
A few of these committees have sometimes
provided mediators during strikes (Cutcher-Gershenfeld 1986).
We return to the role of cooperative labor-management
efforts in specific bargaining relationships below.
being,
For the time
suffice it to say that while the number and scope of
cooperative activities have increased in recent years, such
efforts have not been widely diffused across industries.
Indeed,
one of the central strategic questions for the future of US
industrial relations is whether and how such experiments should
be encouraged, diffused and institutionalized.
The Role of the Federal Government
Also in keeping with the decentralization of
labor-management relations in the US, the role of the federal
government has historically been quite limited when compared with
most major industrialized countries.
As noted above,
the main
pieces of labor legislation were promulgated for railroads in the
1920s and for general industry in the 1930s.
Since that time,
major modifications to the legislative framework shaping private
sector collective bargaining have been made only twice.
In 1947
the Taft-Hartley amendments placed limits on picketing, boycotts,
and other selected union tactics.
In 1957 the Landrum-Grif f in
Act sought to protect individual union members'
rights from abuse
by union leaders and imposed financial reporting and disclosure
responsibilities on unions.
Thus while new collective bargaining
rights were granted to federal government and
a
majority ofstate
and local government workers in the 1960s and 70s, no significant
-12-
strengthening of the collective bargaining rights of private
sectors workers has occurred since the 1930s.
This is true even
though the law has become less effective in the 1970s and '80s in
achieving its intent, particularly with respect to protecting the
rights of workers to organize.
The reticence of the government to strengthen worker and
union rights under the NLRA was clearly signalled by the failure
of comparatively mild labor law reform legislation in 1978.
The
reforms were designed to stiffen penalties imposed on labor law
violators, and to reduce delays in representation elections.
The
defeat of this legislation can be attributed in large measure to
the opposition of individual large corporations,
the Business
Roundtable and the National Association of Manufacturers.
On the other hand, the 1960s and
'
70s did see a rapid
increase in the amount and scope of legislation affecting
employment directly.
Such legislation created the Occupational
Safety and Health Administration (GSHA) and Affirmative Action
and Equal Opportunity Employment (AA/EEO) programs,
Employee Retirement and Income Security Act (ERISA).
and the
However,
the period since 1978 has again been marked by a shift toward
more laissez-faire federal economic and labor policies.
signalled,
This is
for example, by recent deregulation affecting the
airline, trucking,
railroad and communications industries.
While extensive decentralization continues to characterize
contemporary US industrial relations, the foundations of the New
Deal system that supported such decentralization have begun to
erode.
Case-by-case experiments with new forms of
-13-
labor-management relations -- both including and excluding unions
-- are of increasing scope and importance.
We now turn to
consider the environmental pressures that have produced these
changes,
and the measures taken by labor and management
organizations to cope with them.
THE CHANGING ENVIRONMENT
The Economy
The underlying stimulus to the changes occurring in
collective bargaining and industrial relations in the 1980s can
be traced in large measure to the continued weak performance of
the economy.
1970s.
Output per hour in the US has lagged since the late
Productivity growth remains sluggish both by the
historical standard of 3% established in the two decades
following World War II, and compared to our major trading
partners and the newly industrializing nations.
For instance,
between 1979 and 1983, the average annual percentage growth in US
productivity was only 0.2%, as against 2.6% for Japan, and 1.3%
for Western Europe in the aggregate (OECD 1986). In the fourteen
quarters of recovery since the recession of 1982-83, productivity
gains in the business sector have been the lowest of any similar
recovery period since 1949 (though in manufacturing the recovery
has been stronger;
see Table 1)
(Fulco 1986).
Another important development affecting the US economy in
general, and collective bargaining in particular, has been the
growing trade interdependence of the world economy and the
-14-
declining performance of American firms in world markets.
In the
1970s the percentage of US Gross National Product (GNP)
attributable to exports and imports grew steadily; by 1986
exports accounted for approximately 9% of the GNP, and imports
for another 11.4%.
Moreover, the US trade deficit grew immensely
in the first half of the 1980s from $9 billion in 1982 to $170
billion in 1986.
Deficits in our bilateral trade balances
further suggest that the problem of American competitiveness is
not limited to one or two countries.
Rather, between 1982 and
1985, deficits increased with Canada ($4.6 billion),
Japan ($29.8
billion). Western Europe ($21.1 billion), Latin America ($10.4
billion) and the newly industrializing countries of East Asia
($16.4 billion).
The size of our trade deficit with Japan ($55
billion in 1986) has engendered
a
heated political debate around
increased Japanese penetration of US manufacturing markets.
The
deficit with Japan amounts to about one third of our total trade
deficit.
Still,
the magnitude and scope of the problem is
clearly much more significant than the focus on Japan would
suggest.
The declining competitiveness of US firms in world and
domestic markets reflects
a
number of cyclical factors as well as
various aspects of long term decline.
Economists will continue
to debate how much of the decline is due to the 25% increase in
the value of the dollar relative to the Japanese Yen, which
occurred between 1981 and 1985.
They will argue about how much
the subsequent decline of the dollar (by a nearly equivalent
amount) will do to reverse the trend.
-15-
Resolving this debate is
beyond the scope of this paper.
Yet,
given the fact that union
membership in the US is disproportionately concentrated in
import- and export-sensitive industries, the increased exposure
to international competition has taken a significant toll on
union members' jobs and on real (and nominal) wages.
For
example, one recent study links import penetration to lower wage
settlements in the transportation equipment and other
manufacturing sectors, and to lower levels of unionized
employment in the apparel, rubber and plastics and fabricated
metals sectors (Abowd 1987).
Unemployment
Unemployment rates have also remained persistently high, but
have nonetheless been lower than in many other OECD countries.
The rate is currently 6.7%, a full percentage point higher than
in 1979.
Still, French, British and German unemployment levels
have now risen above US levels (see Table 2).
Much of the long term component of current unemployment can
be traced to employment declines, plant closings,
and structural
adjustments in high wage manufacturing industries like steel,
meatpacking, and rubber.
(Unfortunately, nation-wide data on
plant closings are only available for the year 1982, so it is
hard to make longitudinal comparisons).
and January 1986,
Between January 1981
10.8 million jobs were "permanently" lost --
almost half of them by "experienced" (now considered officially
"displaced") workers.
academics,
A presidential task force comprised of
labor leaders and businessmen concluded that
-16-
"responses to worker dislocation from both government and the
private sector have been spotty and narrowly focused, and the US
lacks a comprehensive, coordinated strategy to deal with the
Legislation is now before Congress
problem" (Lovell 1986, p. 4).
that would increase funding of programs for displaced workers and
require employers to provide advance notice of plant closings.
Worker Dislocation, Demographic Changes and Employment Shifts
Worker dislocation appears to persist over long periods of
time for a substantial minority of the workforce.
One analyst
estimates, for example, that about 8% of both men and women in
their prime earning years, and active in the labor market were
unable for a period of five or more years (in a ten year
measurement period) to earn more than 50% of the
a
median wage --
level only sufficient to produce an annual income that
approximates the poverty level for
a
family of four.
Beyond
these discouraging trends among low-earning workers there are
trends to suggest it is becoming increasingly difficult for those
who lose their jobs to find new ones.
For example,
25% of men
and women between 26 and 55 years old who lost their jobs before
1983 had been unable to find new jobs in 1984 -- over a year
later (Osterman 1986).
While the problem of worker dislocation seems to have
worsened in the past decade,
entering the workforce.
a
higher percentage of women are
The labor force participation of women
has increased sharply during the post war period,
and the female
percentage of the total labor force in the US is surpassed only
-17-
by that of Sweden,
3).
among the countries in our study (see Table
By the same token, employment has declined in the
traditionally unionized sectors of the economy, such as
manufacturing, and has increased in traditionally non-union (and
apparently hard to organize) sectors like retailing and
services.
Within the durable goods manufacturing industries,
employment trends are more varied, dropping in subsectors like
primary and fabricated metals and motor vehicles and equipment,
but rising in machinery, and in electrical and electronic
equipment (See Table 4).
It is clear,
however, that more jobs are being created in
the service sector than anywhere else.
The Bureau of Labor
Statistics estimates that ninety percent of current and future
job growth will come from services.
Some of these jobs command
fairly high salaries and allow for opportunities for advancement
and a good measure of job security.
At the same time, however,
many of these jobs are low paying and unstable, and between
twenty to thirty percent are part time positions.
In any case,
service sector jobs on average are lower paying than jobs in the
manufacturing sector, and income inequality has increased more
rapidly since 1978 in services than in manufacturing.
This rise
in income inequality in services can be accounted for in
substantial measure by two factors:
of part time workers,
workers.
the increase in the number
and the drop in the annual wages of such
The overall level of income inequality increased so
sharply in the seven years after 1978 that by 1985 it returned to
1965 levels (Tilly et al.
1986).
(Interestingly, the entrance of
-18-
large numbers of women,
youth and minorities into the workforce
is not significantly linked to the increasing variance in service
income distribution.
)
Finally, wage increases have been
considerably lower in services (e.g., sectors like retailing, and
finance,
insurance,
and real estate) than in the more heavily
unionized mining, construction, transportation and public
utilities sectors (See Table 5).
The Decline in Unionization
There is no single cause that explains the magnitude of the
decline in unionization experienced in the private sector of the
US economy since 1960.
a
Instead, most researchers now agree that
complete explanation must take into account changes in the
structure of the economy, increased management resistance to
unionization, increased management innovation in personnel and
human resource policies, and the failure of the labor movement to
develop new organizing and representational strategies that
appeal to workers in the growth occupations and sectors (Farber
1985; Dickens 1983; Weiler 1983;
Dickens and Leonard 1985;
Freeman and Medoff 1984; Kochan, McKersie, and Chalykoff 1986;
Kochan, Katz,
and McKersie 1986).
There is
a
vast and growing
literature on this subject (see the citations above), which we
need not review here.
For our purposes,
it is sufficient to note
that all of the causal forces listed above have played important
roles in the decline in union membership from 35% of the labor
force in the mid 1950s to approximately 17% in 1986.
The decline of the more heavily unionized industries is
paralleled by
a
number of other developments that are also
-19-
detrimental to the union movement.
Many plants have cut costs
by increasing their reliance on subcontracting and part time and
temporary employment.
For example, 30% of General Motors
components are now produced by subcontractors; for Ford, this
figure is 50%; and for Chrysler Corporation -- the third largest
auto maker in the US -- that number is about 66%.
Each of these
firms would prefer to increase outsourcing in the future.
However, contractual provisions negotiated with the Auto Workers
in 1982 and 1984 impose significant costs on these auto makers if
workers are displaced by outsourcing.
in other industries.
Similar trends are visible
In the garment industry some employers have
been able to shift the burden of insecurity onto part time and
temporary workers.
Doing so has been made easier by recent
government legislation lifting long-standing restrictions on
"home work"
.
Taken together, these trends tend to lower
unionization by creating
a
new workforce with interests that
differ from the existing union membership, and/or which may be
considerably more difficult to organize.
The difficulty of organizing new workers is enhanced also by
employers' resistance to unionization, which has increased
sharply since the early 1970s (Freeman and Medoff 1984; Kochan,
Katz,
and McKersie,
1986).
For example, while the number of
National Labor Relations Board union representation elections
remained relatively constant between 1960 and 1980 (around 9,000
per year) the number of employer unfair (illegal) labor practices
increased four-fold in that period.
Furthermore,
twenty workers who favored bringing in
-20-
a
in 1980 one in
union were fired from
In 1981 and 1983
their jobs.
(the last year for which the
figures are available) the number of unfair labor practices
dropped slightly to about 40,000, but the number of elections
conducted has dropped to about 4,500 -- about half of 1980 levels
(Labor Law Report 1987).
As noted by Freeman and Medoff (1984), the increase in the
measure of employer resistance to unionization is not difficult
Both the incentives and the ability to do so
to explain.
increased over the course of the 1970s.
The motivation to resist
unions increased because the union/nonunion wage and fringe
benefit differentials increased from the 10%
1960s to the 20%
-
30% range of the 1970s.
-
15% range of the
Moreover, the
penalities for such violations of the law are quite mild, and
their imposition is often delayed for years after the violation
occurred.
More importantly, illegal management opposition to
unionization campaigns has been shown to increase significantly
the probability that the union will be defeated in the election,
or that it will fail to achieve an initial contract (Cooke
1986).
Thus,
over the past decade employers learned that the
costs of unionization were increasing at the same time that the
costs of avoiding unionization through both legal and illegal
means were declining.
The combination of the decline of the (highly unionized)
mature manufacturing sectors, the continued increase in both "low
quality" and "high quality" service jobs, growing income
inequality, persistently high unemployment,
to "secondary"
the increasing resort
(subcontracted, part time and temporary)
-21-
employment and, importantly, the continued decline of
unionization, has now come to place tremendous pressures on the
decentralized and collective bargaining-oriented nature of the
New Deal industrial relations system.
Private experimentation
and innovation in labor-management relations -- developments
which deviate from the traditional pattern -- have grown at a
quick pace in the 1980s, but it is not clear how successful such
efforts will be.
We now turn to consider the effects of all
these environmental changes on employers, unions, and
labor-management relations.
THE COLLAPSE OF THE NEW DEAL MODEL
The Effects on Collective Bargaining
The globalization of markets and structural adjustments
within the US economy have combined to make it more and more
difficult for US unions to "take wages out of competiton" through
collective bargaining by standardizing costs among US producers.
Table
6
shows the sharp decline in the average annual wage
adjustment in major collective bargaining agreements (including
over 1,000 workers) since 1970.
First year contract increases
dropped sharply from 9.8% to 3.8% in 1982, to 2.6% in 1983, and
down to 2.3% in 1985 (See Table 6).
(At the same time,
employment cost index has increased by about
See Figure 2.)
a
the
third since 1981.
The drop in wage increases in 1982 and 1983 was
connected with the severe recession in those years.
3.1 million workers covered by major contracts,
-22-
.8
In 1983,
million
of
received either a wage cut or no wage increase at all (Current
Wage Developments April 1984).
(US unit labor costs are still
quite high, by OECD standards; see Table 7.)
Our analysis of the trends in wage determination in major
collective bargaining units indicates that wage settlements
averaged one to three percent below the settlements that would
have resulted, had collective bargaining continued to follow the
wage patterns of the 1970s.
The largest deviations from earlier
patterns were observed in the most centralized bargaining
structures, and in those that relied most heavily on pattern
bargaining (Kochan, Katz, and McKersie 1986).
This again
illustrates the fact that increased product market competition,
combined with declining levels of unionization, produced
a
fundamental shift in wage setting institutions and in collective
bargaining outcomes of the early 1980s.
Some part of the decline in the amount of wage increase in
new collective bargaining contracts can be attributed to
a
spate
of labor "concessions", beginning in 1979 with the highly
publicized bailout of Chrysler Corporation by government loan
guaranties and employee wage concessions.
Labor concessions,
including wage and benefit cuts and freezes and
productivity-enhancing work rule changes, can be found in fully
44% of all major collective bargaining contracts negotiated in
1982 and 1983 (Cullen 1985).
While those two years were marked
by unusually deep recession (some say depression), concessions
have been made since then, in more stable years and in plants and
firms that are in fact still earning substantial profits.
-23-
In
airlines,
for example, unions were forced to grant concessions
even at the financially strongest carriers in the industry (such
as American and United Airlines) even after the end of the
recession (Cappelli 1986).
More recently, firms have begun to
give lump sum bonuses rather than increases that are permanently
built into the wage and benefit base.
Although the data on these
bonuses are still quite limited, the Bureau of Labor Statistics
estimates that in 1986 as many as 40% of major contract
settlements provided lump sum or other kinds of bonuses in lieu
of increases in base wages.
Wages are still relatively high in the US, however.
For
instance. Table 8 shows that production workers in manufacturing
still earn about as much as or more than similar workers in all
the other countries in this study.
Moreover,
the downward
pressure on US wages is likely to continue, given the
comparatively low wages of the newly industrializing countries in
the Pacific Basin, Mexico,
data on average hourly compensation costs as
wages,
Table
and Latin America.
a
9
presents
percentage of US
for selected countries which are often attractive to US
firms making product sourcing and plant location decisions.
Given the wide disparities in labor costs, it is clear that US
workers and unions will continue to find it difficult,
if not
impossible, to "take wages out of competition" by traditional
means.
New strategies for encouraging American employers to
compete on some basis other than labor cost will be required if
the erosion of American manufacturing jobs and workers'
is to be stemmed.
-24-
incomes
Because the US Department of Labor does not collect contract
settlement data for units of less than 1,000 workers, it is
difficult to state precisely the extent and nature of concessions
over the past half dozen years.
However, another indication of
the relative prevalence of labor concessions is the widespread
emergence of so-called "two tier wage scales".
These wage
structures create a "B Scale" (as opposed to "A Scale") or "lower
tier" wage rate for new hires, thereby cutting future labor costs
while avoiding cutting into the wages of workers who must ratify
the contract.
In 1984,
only 4% of all non-construction contracts
included two-tier provisions, but by 1985 that figure had
doubled, and in 1986 10% of non-construction contracts included
them.
In certain industries,
more prevalent.
In airlines,
contracts included
a two
the two tier provisions are much
for example,
70% of all 1986
tier scale, up from 62% in the previous
year and 35% in 1984 (Daily Labor Report, February 1987).
Two
tier wage scales have also been fairly common in railroads and in
the retail food sector.
The growth of labor concessions such as wage cuts and two
tier wage scales has the effect of increasing local contract
diversity,
since such contract changes tend to be negotiated at
plants and firms in particularly unstable financial condition.
Thus, a national union may have some locals whose contracts still
resemble an industry-wide pattern (or perhaps
a
firm-wide
standard contnact), and other locals that are forced to alter the
contract significantly in light of firm- or plant-specific
economic problems.
Bargaining in the auto, rubber, airline and
-25-
meatpacking industries (among others), once based on patterns
that helped workers achieve steady contract increases, now
proceeds on a firm-by-firm and plant-by-plant basis.
In 1986 the
major steel companies bargained separately with the Steelworkers
Union for the first time in over twenty years.
Industry level
bargaining, conducted among the union(s) and employers throughout
an entire economic sector,
Fulmer 1983).
is now a rare event
(
Freedman and
The determination of wages and working conditions
is more and more linked to the performance of decentralized
business units.
Workers in the same industry, and even in
different plants within the same firm, have been delegated
significantly different wages and working conditions.
Local
collective bargaining contracts increasingly contain "riders"
modifying and adapting the national contract to the specific
conditions of different plants and local business units (visible,
e.g.,
in trucking).
Another device for increasing labor cost flexibility is
contingent compensation, such as profit sharing and employee
stock ownership.
concerns,
The workers at many airline and trucking
for instance, were granted stock in lieu of wage
increases (and in most cases on top of wage cuts) during the
early 1980s, when the impact of deregulation was so sharply felt
in both of those industries.
In some cases,
the companies in
question have gone bankrupt despite labor concessions,
leaving
the stock worthless,
In other
cases, however,
involved.
and leaving no profits to share.
the workers have materially aided the companies
At Western Airlines,
for example, workers took
-26-
.
substantial pay cuts in return for profit sharing and stock
ownership, thereby arguably enabling the company to survive.
Though the carrier is now owned by Delta Airlines,
a
larger
non-union company, the workers at least were able to maintain
their jobs, restore some of their concessions through profit
sharing,
and see the value of their stock increase almost
five-fold.
At the time of the merger with Delta, most Western
employees recovered an estimated 75-90% of the wages they gave up
in concessions (Wever 1985).
Similar stock plans have been
negotiated at other troubled airline carriers and trucking
companies.
Whatever the effect on job security, the increase in the
scope and degree of local contract diversity has produced
sometimes bitter power struggles and political conflicts between
local unions, on the one had -- for whom flexibility and
diversity are often associated with survival (as well as
organizational autonomy) -- and national union leaders, on the
other -- whose central authority and coordinating and
standardizing functions are threatened by this diversity.
Conflicts of this nature have emerged over the last five years in
such major unions as the Air Line Pilots Association (ALPA), the
International Association of Machinists and Aerospace Workers
(lAM),
the United Rubber Workers (URW)
,
the United Food and
Commercial Workers (UFCW), and the United Auto Workers (UAW)
For example, ALPA has intervened in local contract negotiations
to minimize particular kinds of concessions;
local union in trusteeship,
the lAM placed a
taking over all local functions,
-27-
because of the local's willingness to grant contract concessions.
Partly because of these organizational struggles, and
largely because of the more general decline in labor's power and
influence, there have been relatively few strikes or lockouts
since the beginning of this decade.
Although the Bureau of Labor
Statistics no longer collects the data needed to determine the
total number of strikes occurring in a given year, trends in
strikes involving more than 1,000 workers are available, and
clearly suggest that industrial action has declined sharply in
this decade.
For example, the number of stoppages fell from 424
in 1974 to 145 in 1981,
and 54 in 1985 (see Table 10).
However,
the latest Department of Labor statistics show an increase to 66
in the number of strikes in 1986 -- the first increase this
decade.
The number of lockouts (work stoppages initiated by
employers), at 41, was also up 44% from 1985 (Daily Labor Report,
March 1987)
There have been a number of highly visible and particularly
prolonged and bitter labor disputes in the 1980s.
Strikes at
Continental Airlines and at Phelps Dodge (a large employer in the
In both cases
copper industry) symbolize the stakes involved.
the imposition of large wage cuts ended only with the
decertification of the unions.
More recently,
a
five month
strike by the Steelworkers against the USX Corporation,
the
industry's largest employer, illustrated an increasingly typical
conflict.
The company's management style was distant,
and its
business strategy was increasingly focused on expansion in
nonunion areas.
Meanwhile, the union was determined to reject
-28-
any concessions to the company unless these were accompanied by a
variety of new industrial relations programs designed to increase
communications between the parties and expand the scope of their
relationship over the long term.
These included profit sharing,
enhanced job security against subcontracting and a broadly
cooperative forum for labor-management discussions.
words,
In other
the fundamental industrial relations goals of the two
parties were completely contradictory.
Thus,
the role of the strike has also changed in important
ways in this decade.
What once was an application of union
bargaining power to achieve marginal improvements in employers'
wage offers, now has become
a
defensive battle over the basic
principles and sometimes basic survival of the bargaining
relationship.
Union Involvement in Strategic and Workplac e M anagement
Measures to increase communication and cooperation between
labor and management have generally occurred at two levels of the
labor-management relationship other than that of traditional
collective bargaining.
First,
in some cases unions have been
involved in strategic management decision making (at
above the normal reach of collective bargaining)
.
a
level
Such
involvement has taken the form of informal information sharing
and regular meetings (such as between Xerox and the Amalgamated
Clothing and Textile Workers Union -- ACTWU) and sometimes formal
union involvement through seats on boards of directors (for
instance,
at several airline carriers and trucking companies) or
-29-
permanent positions on plant management or steering committees
(as at General Motors'
Fiero plant, where the workers are
represented by the United Auto Workers).
In some cases unions have become involved in the development
of new mechanisms to regulate and facilitate the introduction and
implementation of new technologies in
a
variety of sectors,
ranging from communications and defense contracting to basic
manufacturing.
The International Association of Machinists at
Boeing, for example, have been able to gain some increase in
leverage at the collective bargaining table.
Union influence
regarding the introduction of new technologies (and concerning
the effects of such technologies on jobs) has been granted in
return for labor concessions in some other area,
flexibility in the utilization of workers.
such as
However, union
involvement in the technological decision making realm has only
spread to
a
limited number of settings, and generally focuses
only on adjusting to the effects of new technology.
Moreover,
union participation in the planning and design phases of
technological change is still quite rare and experimental in
nature
Indeed, union participation in strategic management decision
making is still extremely limited in scope and impact, and
experimental in nature.
Yet these limited experiments can have
profound consequences, since they represent
a
fundamental
departure from the New Deal idea that it is management's
prerogative to make these decisions without union involvement.
Given the range of choices contemporary firms face in determining
-30-
.
their competitive strategies,
investment decisions,
location
decisions, product sourcing, technology policies, etc.,
and given
the effects that decisions taken at this level have on employees'
welfare, we expect labor representatives to continue to press for
expanded influence at this level.
However, to do so unions will
have to overcome strong managerial resistance to the expansion of
labor's role, and break with the long-standing business unionist
principle of avoiding involvement in managerial affairs.
Thus,
while experimentation with new forms of participation and
information sharing over strategic issues is likely to continue,
such developments will continue to be the focus of considerable
debate and conflict, both within and between labor and management
groups
A second new form of labor involvement in management
decision making takes place on the shop floor or at the workplace
(below the level of collective bargaining)
.
Experiments of this
kind include Quality of Worklife (QWL) programs and autonomous
work groups (as between th ACTWU and Xerox) and many less
extensive programs directly involving workers in decisions about
how they do their jobs.
While the initial focus of QWL programs
initiated in the 1970s was to improve the climate of the
workplace and the satisfaction and motivation of the workforce,
more recently these efforts have been aimed more directly at
increasing productivity and enhancing quality.
Indeed,
our own
studies have shown that unless worker participation programs
address the basic economic needs of employers as well as
enhancing the economic security of the employees, they are
-31-
destined to comparatively marginal status (Kochan, Katz, and
Mower,
1984).
It is clear,
however, that there are still only
a
few
comprehensive and lasting programs for involving unions in such
joint activities.
One reason for this is that meaningful and
sustainable participation efforts require
a
deep commitment on
the part of both labor and management to cooperate at every level
of industrial relations (MIT Industrial Relations Section 1987).
That is, based on the case studies our research group has
tracked, we have concluded that unless participation and
cooperation expand gradually over time to encompass broader
issues,
and unless they are reinforced through collective
bargaining activities and at strategic levels of decison making,
these experiments are unlikely to be institutionalized into
on-going industrial relations practices.
The most successful of
these cases are ones in which the parties have gone beyond narrow
QWL programs to pursue problem solving and participation
processes that address more general issues.
For example,
in a
number of cases we have been following, the parties have begun to
make significant changes in the organization of work and the use
of new technology.
In others,
joint efforts have produced new
forms of work organization that emphasize the use of teams,
job classifications,
and new compensation systems.
Again,
however extensive use of participation and continuous
union-management cooperation is, to date, found only in
minority of bargaining relationships in the US
-32-
a
fewer
The Range of Management Strategies
The ability of any union to become involved in workplace and
strategic management decisions is of course strongly influenced
by management's willingness to "let the union in" to these new
areas of industrial relations activity.
In the US,
managerial strategies in this respect is wide.
the range of
Three typical and
quite distinct approaches can be identified.
The first kind of management strategy towards increasing the
scope of labor-management relations is generally found in
companies that are is heavily or entirely unionized, and that
have experienced moderate to strong increases in competitive
pressures in the 1980s.
In these cases the costs to management
of union avoidance are high,
and therefore the firm needs
cooperation from its union(s) if it is to meet its competitive
challenges.
Thus these employers often seek a (limited)
partnership with the union(s).
A typical example of such a
relationship is that between the United Auto Workers (UAW) and
General Motors (GM) Corporation.
Since 1973, the UAW and GM have expanded what started out as
narrow QWL programs in specific plants to encompass
a
array of joint activities.
joint UAW-GM
In 1982,
for example,
a
Human Resource Center was established to administer
a
broader
variety of
worker and union leadership training and education activities.
In a growing variety of GM plants the union and the company have
experimented with new team-based work systems that are designed
to increase flexibility.
In 1983 the company and the union began
jointly to plan for the design of its new Saturn Division to
-33-
The industrial relations system in
produce small cars in the US.
this new division calls for voluntary recognition of the union
and participation of union representatives at all levels of the
organization from the shop floor to the top executive group and
board of directors.
paralleled by
a
This new level of union involvement is
new cooperation system,
a
team form of work
organization, and a commitment to the principles of compensation
An equally radical departure from
and consensus decision-making.
the traditional New Deal model is found in the UAW-Toyota-GM
joint venture plant called the New United Motors Manufacturing
Incorporated (NUMMI).
Similar, but perhaps more limited
experiments with a new industrial relations model are found in
Ford and Chrysler, as well as
a
limited number of other highly
unionized firms in the US.
The second typical management stratetgy is quite different
from the approach at GM.
This second approach might be termed
the successful union avoidance strategy.
Large and well known
companies approaching this model include International Business
The nonunion (or union
Machines (IBM) and Delta Airlines.
avoidance) strategy is often, but not always,
associated with
low level of unionization throughout the industry.
a
For example,
the high technology computer industry in which IBM is the leader
is barely unionized at all.
In such a sector the incentive to
remain nonunionized is extremely high because of the need (among
other things) to maintain flexibility and labor cost
competitiveness.
However, Delta Airlines faces
-34-
a
somewhat different
situation.
This company operates in an industry which has long
been (and continues to be) highly unionized.
used
a
The carrier has
number of methods to keep unions out, including paying the
highest wages in the industry, and aggressively resisting unions
that have tried to organize portions of the workforce.
Over the
years. Delta has developed a reputation for being a leader in
human resource management techniques which are associated with
high levels of job satisfaction and company loyalty among many of
its employees.
Moreover, Delta,
like IBM and many other
companies following this nonunion model, have worked hard to
provide their workers something approaching lifetime job
security.
a
The promise of such employment stability can serve as
strong impetus for employees to reject unionization bids.
While few other nonunion firms are as innovative in their
human resource management policies as are Delta or IBM, enough
nonunion employers have adopted enough elements of this model to
contribute to the decline in unionization in the US (Kochan,
McKersie and Chalykoff 1985).
There is little reason to expect
any significant change in the policies of these firms or in the
results they achieve.
The third type of management approach to unions is found in
cases where the company in question has some significant portion,
but not all of its facilities unionized.
Examples include
General Electric as well as the vast majority of other large,
multidivisional US firms.
choice.
In these cases management faces a
It can target corporate resources at its nonunion
facilities and expanding in areas where the union(s) can be
-35-
avoided.
Alternatively, it can reinvest in and retrofit existing
union facilities and "let the union in" to new facilities on the
basis of increased labor participation as well as
and flexible set of production processes.
a
competitive
The latter choice is
clearly more difficult to make when competitors are entirely
nonunion, and the prevailing union/nonunion labor cost
differential is high.
Firms in this category generally have been successful in
separating their union and nonunion establishments and
strategies.
Few union leaders have been willing
to'
cooperate
with management in existing establishments under these
conditions, however. How this group of firms and union leaders
responds in the future will have a critical effect on the type of
industrial relations system that evolves in the US in the years
ahead.
Changes within the Union Movement
The pressures outlined above, and the fundamental changes in
industrial relations they have produced in the 1980s, have
plunged the labor movement into what promises to be
period of debate over its future strategies.
a
sustained
The stakes involved
in these debates appear to be every bit as profound as those of
the 1930s between advocates of industrial unionism and those who
favored maintenance of craft unionist organizing principles.
any case,
In
it is clear that some new strategies for organizing and
for representing American workers will be needed if the labor
movement is to reverse its long term declines in membership, and
-36-
to regain its reputation as a stimulus to innovation in working
conditions.
One step in the direction of suggesting
a
broader
agenda
for future union activities was taken by the AFL-CIO's Committee
On the Future of Work (1985).
This committee was established by
the AFL-CIO executive council in 1982,
and charged with the task
of evaluating the current state of the labor movement's
strategies for promoting the economic and social interests of
American workers.
It brought together the presidents of about
twenty major unions with AFL-CIO officers and staff, to analyze
data and discuss evidence on the state of the labor movement.
The Committee issued a lengthy report in 1985 suggesting possible
These
strategies for the revitalization of the labor movement.
include the possible extension of "associate membership" status
(an individual membership option for workers who are not in a
formal collective bargaining unit),
financial and other services
(designed to broaden the functions the union performs for its
members), and a variety of more familiar ideas including the use
of "corporate campaigns"
(designed to neutralize employer
opposition in organizing drives or in contract disputes and more
positive media coverage.
While the Committee's suggestions have
sparked considerable interest and internal debate, many of its
ideas are difficult to implement.
The net effects of the
Committee's efforts will therefore not be clear for some time to
come.
At this point, however,
it is fair to say that there is no
consensus either among the top union leaderships in the country,
within the AFL-CIO or among local union leaders as to
-37-
a
new set
of strategies for the US labor movement.
Instead, we are likely
to see a prolonged period of experimentation,
change,
internal
political debate and conflict that will be consistent with the
decentralized structure of the labor movement and the US
industrial relations system.
The lack of consensus within the labor movement as to the
appropriate line of action is one (of many) factors contributing
to the limited diffusion of labor-management cooperation schemes
in the US.
As noted above, no such arrangements have been
established at the national level.
There have been a few
isolated cases of (usually short-term) union involvement in
industry level productivity-enhancing progams, involving for
example the International Masonary Institute and the Joint
Labor-Management Committee in the Retail Food Industry.
However, the credo of both unions and managements in the US has
historically been to "let management manage", so most managers as
well as union leaders still approach these joint initiatives with
a
great deal of caution.
Indeed, many of these experiments have
been initiated primarily (or at least partly) in response to
severe economic pressures, where union involvement in management
decision making has been granted only as
labor concessions.
a
"quid pro quo" for
Sustaining and diffusing these joint
activities will require that union and management leaders make
the strategic choice to depart from these traditions.
A few unions have begun to take steps in the direction of
re-educating their local leaderships and members as to such novel
forms of strategic planning and joint participation with
-38-
management outside the arena of collective bargaining.
One
example of such a program is an extensive and jointly funded
United Auto Workers (UAW) /General Motors (GM) "Paid Education
Leave" (PEL) program, in which the entire GM local leadership is
being sent through four weeks of training concerning the
economic, political and industrial relations challenges of the
day.
Yet,
undergoing
not surprisingly, many unions (including the UAW) are
period of intense debate, intra-organizational
a
conflict and political factionalism around
strategic adjustment approaches.
a
variety of potential
Training of this sort is
clearly the exception rather than the rule.
Government Policy
Government labor policy is currently subject to the same
measure of internal debate, uncertainty and contradiction as are
the strategies of labor and management.
On the one hand,
policy in general and the NLRB in particular have taken
turn toward
a
a
labor
decided
more conservative and pro-business posture,
consistent with the philosophies of the Reagan admininstration
(Levitan et al.
1986; Morris 1987).
At the same time, within one
branch of the US Department of Labor there have been some major
new initiatives to support innovations in industrial relations.
The Bureau of Labor-Management Relations and Cooperative Programs
has become increasingly committed to promoting labor-management
cooperation, and to developing
a
share an interest in establishing
network of professionals who
a
prominent role for organized labor.
new agenda to include
This,
however,
a
is the extent
of government involvement in the development of constructive
-39-
adjustment mechanisms in the area of labor-management relations.
More recently, in the wake of
a
Congressional impasse, the
Secretary of Labor established a labor-management task force to
explore policies for workers permanently displaced because of
plant shutdowns or large scale lay-offs (discussed briefly
above).
The task force recommended the enactment of a new $900
million program of enhanced training and labor market services
for displaced workers.
But while members of this group were able
to agree that advance notice of plant closing is desirable,
the
management representatives could not reach consensus on whether
or not such provisions should be required by law (Lovell 1986).
This issue is once again being debated in the Congress, and is
widely expected to result in legislation.
a
A general interest in
variety of labor and employment policy issues has again
surfaced in the Congress, after
attention to these problems.
a
prolonged period of lack of
Hearings and debates are currently
underway on such issues as the minimum wage, health insurance,
and a variety of aspects of trade policies.
This increased
interest is largely due to the fact that the Democratic Party
regained
a
majority of the seats in the Senate in 1986.
Labor
and employment issues are at least temporarily elevated to
higher position on the national agenda.
a
a
Whether this results in
visible or significant shift in the content of national labor
and/or employment policy still remains to be seen.
Some limited adjustments to structural change have been
undertaken by the government.
The Job Training Partnership Act
(JTPA) of 1981 created the framework for a decentralized set of
-40-
mechanisms for the development of local employment policies.
JTPA was designed to allow leaders in local government,
The
industry
and education to cooperate in the management of technological
transition, thus minimizing workers'
job loss and displacement.
But while the principle underlying these efforts is sound, and
the goals are broadly shared,
funding of JTPA has been reduced to
only about 50% of annual employment and training expenditures
during much of the 1970s (Levitan et al
.
1986).
As such,
its
real potential efficacy has not been tested and its concrete
value cannot be judged.
Indeed,
the federal government's General
Accounting Office (GAO) admits to the very limited effects of the
program, citing that only about 7% of those even eligible for
JTPA assistance have been able to avail themselves of the needed
services (Daily Labor Report, March 1987).
CONCLUSIONS
Whatever adjustments to industrial relations may occur in
the short run,
it is highly likely that the unionized percentage
of the U.S. workforce will continue to decline as it has over the
past few decades.
The internationalization of the US economy has
its severest impact on sectors that are most highly unionized.
The movement of capital (either out of the country or from union
to nonunion establishments or division of US firms)
will
continue to have major effects on union employment (Bluestone and
Harrison 1982). The growth sectors, mostly in services, tend to
create jobs that the labor movement has so far failed to
organize,
in part as a result of prevailing labor laws and
-41-
labor's traditional organizing strategies.
The diffusion of new
technology will continue to reduce the labor content required for
many manufacturing processes.
union jobs would require
a
To avoid further reductions in
combination of economic growth fueled
by product innovation in manufacturing firms and service sectors,
and new,
successful union organizing efforts.
While the AFL-CIO and some unions have identified
a
series
of new measures for organizing traditionally unorganized workers,
few of these ideas have been implemented in practice, and many of
them are the subject of much controversy within the labor
movement.
For instance, the AFL-CIO'
consideration of associate
While this technique may
membership is quite controversial.
increase membership,
s
some claim that it will divide the ranks of
workers and undermine worker solidarity.
Indeed, controversy characterizes other issues touching the
labor movement as well.
Conflicts between local and national
unions concerning the appropriate response to employer demands
for concessions have flared up in the International Association
of Machinists in 1982 and 1983,
Association in 1983 and 1984.
and in the Air Line Pilots
In both cases the central
leadership was less willing to make concessions than the local
leadership.
But in other cases (involving, e.g., the United Food
and Commercial Workers and the United Auto Workers,
the situation has been reversed.
among others)
More subtle conflicts have
emerged in major unions like the Communications Workers and the
Auto Workers regarding appropriate extent and nature of flexible
approaches to work organization and contingent wage mechanisms
-42-
(some of which,
highly publicized Saturn
as at General Motors'
plant, represent significant departures from traditional shop
floor labor-management relations and divisions of labor).
There
is no question that there is a substantial amount of controversy
and debate within the labor movement as to the validity and
desirability of various experiments with "non-traditional"
labor-management relations.
Nonetheless, as noted above, quite a bit of change and
innovation in these areas has already occurred.
decentralized fashion -- but also in
a
unions and managements (and, sometimes,
In a typically
wide range of settings -local governments) have
engaged in new methods of dealing with each other in the process
of negotiations,
in shop floor or workplace relations,
domain of strategic managerial decision making.
and in the
In the 1970s
such developments were sporadic and often not sustained.
In the
early 1980s they were often identified with the need to respond
to severe economic crisis.
But as we near the end of the decade,
some of these developments appear to have taken on
a
more
permanent quality, especially where they are integrated into
a
deeper transformation of managements' business and technological
strategies.
In certain industries (as,
e.g.,
in autos),
the
question is no longer whether to adopt such innovations, but
which innovations to adopt, and at what pace to adopt them.
However,
it is still entirely unclear whether these kinds of
industrial relations changes can be diffused to permeate the
economy and transform the fundamental nature of the relationship
between the parties.
Indeed,
although systematic quantitative
-43-
data are not available, our impression is that the rate of such
diffusion may have slowed somewhat since the earlier part of this
decade.
The extreme decentralization of U.S. industrial
relations and the historical reluctance of the government
(especially at the federal level) actively and visibly to
articulate a clear policy on these issues may inhibit the
diffusion and institutionalization of these developments.
Therefore, we believe that these two features of U.S. industrial
relations -- the decentralized locus of labor-management
adjustments, and the laissez-faire approach of the government --
need to change as necessary (but not sufficient) preconditions to
the broader application of the developments discussed above.
differently,
Put
local unions and managements need the support of
their national counterparts and of the government,
in their
efforts to adjust.
It will be difficult for many employers to make the
necessary changes.
To begin with,
top corporate executives will
have to commit their firms to long term business strategies
capable of maintaining employment in the US,
rather than taking
advantage of lower labor costs in other countries.
Firms that do
so will need to re-educate their managers to think of unions as
institutions that (among other things) contribute to the
productive process.
The historical aversion to unions among US
managers will render this shift in outlook and strategy
difficult.
Indeed,
all indications are that the current level of
anti-unionism is more intense than it has been at any other time
since the Great Depression.
-44-
Moreover, there is little doubt that management has been the
dominant actor in forcing changes in American industrial
relations in recent years. This trend began with more aggressive
and sophisticated strategies to avoid unions in the 1960s and
1970s,
and then continued in the 1980s with the introduction of
changes in collective bargaining.
This proactive posture on the
part of management is likely to prevail at least in the near
future, given the sustained competitive pressures and
technological changes occuring in world markets, and given the
relative weakness of American unions.
The central question is.
What directions will managerial industrial relations initiatives
take in the years ahead?
Given the historic aversion to unions which is so deeply
ingrained in the culture of the American managerial community,
there is no doubt that those firms that are currently not
unionized,
like those partially unionized firms that see viable
opportunities for avoiding further unionization, will continue to
follow "union avoidance" strategies.
No significant changes in
management stratgies are therefore likely in such firms.
Likewise,
firms with very high percentages of their labor force
unionized that lack viable non union options are likely to
continue to press aggressively for changes and innovations in
collective bargaining and industrial relations, along the model
presented by GM and the UAW, They are likely to do this in
concert at all levels of their labor-management relationship.
The pivotal settings will be those cases that fall in
between these two extremes.
Will partially unionized firms
-45-
policies that expand and sustain innovations that require a
broader role for unions?
Or will they escalate their efforts to
limit union influence, and channel more resources into union
avoidance?
The latter courseis more likely, unless unions are
able to raise the costs of pursuing this route and to promote and
demonstrate the value of industrial relations changes which
entail broader forms of worker and union participation at the
workplace, in bargaining, and in strategic decision making.
Thus
we believe the future of management policies in these partially
unionized firms could be influenced by the strategies adopted by
the unions that currently represent their employees.
The more
these unions cling to their traditional roles within the New Deal
system,
the more freedom and incentives management will have to
pursue a union avoidance strategy.
On the other hand, the more
aggressively unions promote new forms of participation in
strategic and workplace issues, the more directly they will force
employers to choose between greater cooperation,
flexibility,
and
innovation versus greater confrontation and resistance to change.
Taking this latter course will not be easy for organized
labor.
own.
Unions still face difficult strategic questions of their
The need for political strategies has become evident with
the increasing failure of traditional economic approaches.
Still,
questions and controversies abound as to which political
strategies should be adopted, and what portion of the labor
movement's scarce resources should be allocated to these
endeavors.
Important pieces of the collective bargaining process
itself must also be preserved,
in order for unions to be able to
-46-
exert sufficient leverage to shape the new and non- traditional
aspects of the labor-management relationship.
Much of the impetus for change will need to come from the
unions,
for it is the labor movement that faces the most
immediate incentives to change the nature of U.S. industrial
relations.
Even assuming a vibrant and creative labor response
to the current difficulties, however,
it is not at all clear
whether the changes enumerated above will (or how they would)
come to pass.
It is quite possible,
indeed likely, that things
will go on much as they have for the first three quarters of this
decade, with union membership continuing to decline.
After all,
the turmoil associated with the deep recession of the early 1980s
appears to have passed without engendering much social, political
or economic change.
If the next seven years continue as the last
seven years have gone, however, the chances for incremental and
consensual changes will be increasingly diminished; more
dramatic, more abrupt and less controlled changes would then be
much more likely.
47-
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